Play with Me Sesame, the first spinoff created from Sesame Street's library, will air on Noggin for up to seven more years. (Photo courtesy of Noggin.)

Sesame Workshop sells its stake in Noggin cable network

Published in Current, Sept. 2, 2002By Karen Everhart

Sesame Workshop last month sold its 50 percent share in the digital children’s network Noggin to Nickelodeon, its Viacom-owned partner in the educational cable venture since 1998.

Cash from the buyout allows Sesame Workshop to pay down a major debt and invest in new production, said President Gary Knell. The Workshop will continue to produce new shows for noncommercial Noggin but regains control of its extensive Sesame Street library in three years.

"We were looking at our long-term ability to achieve our mission as a nonprofit" and decided to put more resources into its core strengths of research and production, Knell said. "We will have a continued presence on Noggin and will be able to partner with others on our library in the future."

He would like to bring the 4,000-hour Sesame Street library back to public TV. "We’ve told PBS and others in public TV that we’re interested in finding other ways to creatively use the Sesame Street library in the future," Knell said.

In a 1998 licensing agreement that some public TV officials viewed as detrimental to their children’s service, the Workshop negotiated an end to PBS’s exclusive rights to the library. Nickelodeon and Children’s Television Workshop — as it was then known — unveiled their plans for Noggin shortly afterwards. CTW initiated plans to launch a cable channel under Knell’s predecessor, David Britt.

"Having Noggin fully within our family is great for us." said Dean Martinsen, chief spokesman for Nickelodeon. The channel has its own independent programming division that now reports to Nickelodeon President Herb Scannell rather than to a board. "There will not be any change in terms of what we do."

Financial details of the buyout remain confidential. The Workshop had a new need for cash, having borrowed $100 million in late 2000 to buy full ownership of the Sesame Street Muppet characters from EM.TV & Merchandising, a German media company. Proceeds from the Noggin sale will "offset a good chunk of that," said Knell, while also seeding new international productions, a major emphasis for the Workshop’s activities.

Noggin, launched in early 1999 as lead offering in Viacom’s MTV Networks digital tier, carried reruns of Nick shows and ex-PBS fare from the Workshop’s vaults, including the venerable Sesame Street. In April, programmers split the channel’s broadcast day into two distinct blocks — Noggin, a daytime service for preschoolers, and "The N," an evening lineup of original and old shows for 9- to 14-year olds. Both run ad-free.

Viacom’s most recent financial report said 23.3 million households have access to Noggin, but publicists round that figure up to 25 million. The channel began earning a profit this year, according to Martinsen.

Cable companies tend to "fudge the edges" of their subscriber numbers, cautioned John Carey, who teaches media at Columbia University’s Graduate School of Business. But for a channel distributed on the new digital tiers of cable systems, Noggin’s numbers are "actually pretty good."

PBS Kids, by contrast, is available in 9 million homes, largely through digital broadcasts of public TV stations, according to a PBS spokesman. It is not fed directly to cable systems by satellite.

The Sesame Workshop buyout may foreshadow an end to Noggin’s days as an ad-free network, Carey predicted. "My best guess is that this has to do with the noncommercial business model being insufficient, and Sesame Workshop didn’t want to go with a commercial environment."

Nickelodeon itself started as a commercial-free service that imitated public TV’s business model, he recalled. It switched to a commercial format after business execs realized "it wasn’t going to work."

Karen Jaffe, executive director of Kidsnet, doesn’t see a shift to ad-supported fare on Noggin. "There’s not going to be a significant change in how it operates. This is a financial arrangement — not a change of mission."

"The jury’s still out on digital, but if it becomes what everyone thinks it will, they’ll certainly be positioned to be at the crest of that and, in some ways, ahead of the pack," Jaffe added. "The planning, mission and general structure of the network is very healthy, and looks to me to continue to be so."

The Workshop wasn’t motivated to sell by a shift in Noggin’s business plan, according to Knell. "We’re really proud of what we helped birth here — it is in 25 million homes and growing."

"This was really about the core strengths of the partners and where we could best use the resources. Viacom now owns the channel and they can do, in effect, what they want, as long as Sesame Street is not appearing in a channel that’s not consistent with its current mission. They’ve assured us that that won’t happen under the terms of the agreement."

The Workshop has already contributed to three original series now airing on Noggin and The N. Play with Me Sesame, a Sesame Street spinoff, pairs archival material with new wrap-around elements. Under the new agreement, Noggin retains rights to this series for seven years. The Workshop also co-produced Tiny Planets, a preschool series, and Sponk!, an improvisational comedy game show airing on The N. Two Down Under, a `tween series co-produced by the workshop and three other partners, debuts next year, according to a Noggin spokeswoman.

In weighing the future of its Sesame Street library, the Workshop will look at video on demand, "where PBS Kids might be going with its digital platform," and whether PBS is interested in an enhanced relationship or animated spin-offs using some of the characters, Knell said.

The Workshop’s international arm is starting work on a version of Sesame Street for India and is continuing production of a series created for the Middle East. A new package of shows to be broadcast in Israel next spring will include segments produced in the Palestinian territories and Jordan. "It’s really a question of what is capable of being broadcast in the political reality that exists over there," said Knell. "We are completely committed to staying in the region."